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Please show step by step how to figure this out. 7. XYZ Corp. pays $1,200,000 for...

Please show step by step how to figure this out.

7. XYZ Corp. pays $1,200,000 for machinery in 2018. Ignore bonus depreciation in the following calculations.
a. What is the total 2018 depreciation deduction if XYZ elects the Section 179 "option to expense?"
b. Same as (a), except total 7-year property acquired during the year (which includes the machine) amounted to $2,520,000?
c. Same as (a), but if XYZ Corp.'s taxable income before the Section 179 election was $4000, how much of the Section 179 depreciation is deductible?

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Answer #1

A. As par section 179 Corp. can cliam 100% of cost of machinery but Max. to $10,000,000 deduction Cliamed by Crop.Normal 1st Year Depreciation is $0.00 and Section 179 Deduction for Exp. is $10,000,000.

B.   1st Year Depreciation is $0.00 and Section 179 Deduction for Exp. is 9,80,000

C.  If there is not enough 'earned income' for the Section 179 to offset, it will be carried to the next year.Hans Amount $4000 is claimed deducation for 2018

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